Most Asian stock markets rose modestly Monday as exporters got a boost from hopes a massive stimulus package will kick-start the U.S. economy, but expectations of dire fourth-quarter earnings kept a lid on gains.

European bourses opened higher as Britain announced plans for a second bailout of banks.   

With U.S. president-elect Barack Obama's inauguration on Tuesday, sentiment has been supported in recent days by hopes the new administration will act boldly to revive the ailing American economy, a vital export market for Asia. An $825 billion US stimulus package is making its way through Congress.

Still, the optimism could quickly fade amid a litany of dismal earnings results, which could drag the Dow below 8,000 points, said Castor Pang, an analyst at Sun Hung Kai Financial in Hong Kong.

"Most investors fear the U.S. markets will continue to tumble. Once Obama's inauguration is out of the way, companies will release fourth-quarter results and they are expected to be very poor," Pang said.

"The global economy is still continuing to slump," he said. "It would seem that there will be no sign of recovery in the first half of this year and that will keep sending markets south."

2nd bailout for British banks

Major bourses in Europe jumped at the open on news the British government plans a second bailout for banks, including a scheme to insure them against losses, in hopes of spurring growth by boosting lending. Britain's FTSE 100 rose two per cent, Germany's DAX gained 1.2 per cent and France's CAC-40 was up 1.4 per cent.

Japan's Nikkei 225 stock average edged up 26.70 points, or 0.3 per cent, to 8,256.85, South Korea's Kospi gained 1.4 per cent to 1,150.65 and Hong Kong's Hang Seng recovered early losses to rise 0.6 per cent to 13,339.99.

Shanghai's benchmark rose 1.7 per cent and markets in Australia and Singapore also gained. Thailand and Malaysia retreated.

Trade was muted in Asia ahead of the Martin Luther King Jr. national holiday in the U.S. on Monday.